Contentious issues in accounting for intangible assets / Helena Fourie

Intangible assets have always been a prevailing concept within the economic milieu andhence in the accounting domain, but it has not been a prominent aspect, or evenregarded as an asset, since the emphasis in the economic environment was invariablycast on property, production facilities and equipment.Economic development and progress over the last +I- 30 years have plunged the issueof intangible assets into the limelight and it has now become a bone of contention in thedoings of the financial accounting operating arena.One has to look closely at the driving forces of the current economic environment tograsp the newfound impetus that brought the issue to the fore. The economicplayground of the new millennium has all sorts of toys to toss around, such asinformation, innovation, services and relationships. The common denominator amongthese driving forces lies in its intangibility.Users of accounting tools have stumbled across a significant dilemma by raising theirdisquietude about the relevancy of financial statements where intangible assets areconcerned. There are resounding claims that intangible assets are not exhibitedaccurately in the financial statements of companies.The general objective of the research project has been to single out certain aspectsconcerning the topic of intangible assets and to assert how the accounting fraternity isdealing with the situation at hand.The study embraced the following aspects:*A literature study;*Empirical research by means of a structured questionnaire that gathered dataabout certain identified aspects of intangible assets and measuring how it ishandled by the respondents in the marketplace; and*Telephonic interviews with key banking officers in the bank sector in SouthAfrica.The findings of the questionnaires were used to flag crucial aspects of intangible assetsand to identify the ensuing approach needed to handle intangible assets within theaccounting body of knowledge. The results have shown that the recognition of andreliably measuring intangible assets have become a dilemma that is, in all probability,here to stay for a while to come. Users that responded in the empirical study clearlyindicated that the reliable measurement of intangible assets outweighs the relevancy ofinformation about intangible assets.On the strength of the results of this study, by word of the users of financial statements,the recommendation is posed that relevant, additional information regarding intangibleassets should be attached to the financial statements, or that additional notes should beprovided.Moreover, a supplemental recommendation entails that the classification and therecognition criteria of accounting standards should be revisited in order to establishclearer guidelines for the identification and recognition of intangible assets.